Next week Cabinet will discuss the scale of the financial challenge facing the council. Two reports about the council’s current and future budget position will be discussed. These show a forecast overspend of almost £5m against this year’s budget, set in February – and over £10m over the next four years. These are worrying figures and underline the harsh reality of the council’s financial position.
It is essential that the council acts now, to put the council’s finances on a sustainable footing for the future. Tough decisions will be needed to bring the budget into balance. The council will need to think boldly and innovatively about the way in which it delivers services, brings in income and supports economic growth. Without a balanced budget the council cannot continue to deliver services to our communities, or to make the investments needed to protect and enhance our borough.
The council continues to have the lowest council tax in the country, outside of London. This means that we have a lower level of income to fund our services. We have low levels of financial reserves and high levels of borrowing over previous years. Servicing this borrowing has become more costly due to increases in interest rates – and we are set to spend £10.8m in the next financial year on interest repayments – this represents over 10% of the budget the council has to spend on local services. We are seeing an increased number of adults requiring social care, and this is set to rise in future as our population ages. The 2021 Census showed that number of 70-74 year olds in the borough had increased by a third in ten years. We also need to build up staff capacity in key areas to enable us to undertake the changes we need to make – which further adds to budget pressures.
Whilst the Royal Borough faces particular challenges, local authorities across the country are struggling to balance their budgets. Inflation continues to run at very high levels and this increases the cost of delivering services and the council’s major contracts. Higher construction costs make it more expensive to maintain the borough’s physical infrastructure and to deliver new housing and infrastructure projects. Uncertainty about funding levels from central government are making it difficult to plan ahead with confidence.
Next week Cabinet will discuss these challenges and launch the budget process for 2024-25. The council is already working hard to close the budget gap for this year and taking action to address overspend in areas including adult social care and environmental services. We are also improving the way in which we manage contracts and procurement and looking at ways to get more value from our assets and from investment partnerships.
Over the next few months, we will be developing proposals to balance the budget for the future and to agree a new set of priorities for the borough. These will be brought to Full Council next February, where we will be agreeing our new Corporate Plan and Budget for 2024-25.
The council will work in partnership with our communities, businesses and voluntary and community organisations to address these challenges. We will be holding a series of discussion events over September and October, to shape our priorities and generate ideas for future ways of working. This will be followed by a wider public consultation in December. More information about how to join these conversations will be shared over the coming weeks.
Councillor Lynne Jones, deputy council leader and Cabinet member for finance, said: “As a new Cabinet, this is our first look at the council’s finances. We have been given our baseline, and we are clear that we will take the action needed to balance the budget and to put the council on a sustainable financial footing going forwards. This will be our top priority and is crucial to enable us to deliver for the people of the borough and to pursue our wider priorities.
“We recognise that we will need to take some tough decisions. We will need to be ambitious in transforming services to ensure they run effectively and efficiently, ensuring we get the best value from our contracts, and strengthening our focus with partners around prevention and early intervention to help support our most vulnerable and manage growing demand.
“We are taking forward a single business planning process to identify our priorities and plan our finances. By holding including early conversations with our residents, businesses and partners, we will work with our communities and this will help us to make more informed, transparent and strategic decisions.
“We face challenges due to historical low council tax, low reserves, and high borrowing. We will work to solve these challenges and, with the community, refocus on what’s important and needed locally.”